Emap is selling its US division to Primedia for $515 million.
Emap’s foray into the US went badly from the start. The massive outlay of $1.2 billion in 1999 was queried at the time, but Emap felt it was justified in order to get a solid base in the world’s largest market. But now it seems the base was not solid enough. Emap has blamed part of its troubles on its mere 3% hold of the US market, which it claims severely disadvantaged the division in terms of its position with wholesalers and the retail trade.
The company expected the purchase of the US specialist consumer magazine publisher, formerly Peterson, to offer above average growth and opportunities for consolidation in the fragmented US market. However, this turned out to be far from the case, with advertising revenues and magazine readerships falling markedly over the period of ownership. Structural factors made it difficult to operate without significant scale and further, complementary acquisitions were hard to find.
CEO Kevin Hand, who led the acquisition, was ousted in May and the division has been fast to follow. Primedia beat offers by two other, unspecified bidders for the 60-strong magazine portfolio, including ‘Hot Rod’ and ‘Guns & Ammo’. Emap’s solitary US success story, FHM, is not being sold and will remain as the last reminder of Emap’s venture in the country.
Now, with the sorry division off its shoulders, Emap is free to face the future with a little more optimism. The company is likely to be rather more cautious about such large-scale investments in the future, but is still making plans for continued international expansion. FHM, which is already published in 15 countries, will be pushed out to another five by the end of the financial year. Emap has been distinctly lackluster in recent years regarding new ventures, its US and internet operations being prime examples, so it may be best off refocusing on existing demand and trying to replicate it elsewhere.
